Let's evaluate the lender's good faith estimate of the closing costs step-by-step:
1. Calculate the estimated closing costs:
The lender estimates the closing costs to be [tex]\( 3\% \)[/tex] of the loan amount.
Loan amount: [tex]\( \$180,000 \)[/tex]
Estimated closing costs:
[tex]\[
\text{Estimated Closing Costs} = 3\% \times 180{,}000 = 0.03 \times 180{,}000 = \$5400
\][/tex]
2. Calculate the actual closing costs:
We need to sum up all the actual closing costs listed:
[tex]\[
\begin{aligned}
&\text{Loan origination} &= \$345 \\
&\text{Title insurance} &= \$600 \\
&\text{Attorney's fees} &= \$1,350 \\
&\text{Appraisal} &= \$480 \\
&\text{Inspection} &= \$550 \\
&\text{Recording fees} &= \$175 \\
&\text{Escrow} &= \$1,900 \\
\end{aligned}
\][/tex]
Adding these together:
[tex]\[
\text{Actual Closing Costs} = 345 + 600 + 1350 + 480 + 550 + 175 + 1900 = \$5400
\][/tex]
3. Calculate the difference and the percentage difference between estimated and actual closing costs:
[tex]\[
\text{Difference} = \left| \text{Actual Closing Costs} - \text{Estimated Closing Costs} \right| = \left| 5400 - 5400 \right| = 0
\][/tex]
The percentage difference (relative to the actual closing costs) is calculated as:
[tex]\[
\text{Percentage Difference} = \left( \frac{\text{Difference}}{\text{Actual Closing Costs}} \right) \times 100 = \left( \frac{0}{5400} \right) \times 100 = 0\%
\][/tex]
4. Evaluate the lender's estimate:
Based on the given criteria:
- If the percentage difference is [tex]\( 0\% \)[/tex], the evaluation should be:
\textbf{a. The lender made an excellent estimate; it was equal to the actual closing costs.}
Thus, the lender made an excellent estimate; it was equal to the actual closing costs. The evaluation is option a.
